Product Liability

1
Product Liability

• Ill warrant him heart-whole.
• William Shakespeare, 1564-1616

2
Product Liability

• Under the Uniform Commercial Code, certain
  warranties can arise in a contract for a sale of
  goods.
• These include express warranties, an implied
  warranty of merchantability, and an implied
  warranty of fitness for a particular purpose.
• Customers and others can recover from any seller
  for losses resulting from a breach of these
  warranties.

3
Express Warranty

• A promise, ancillary to an underlying sales
  agreement, that is included in the written or
  oral terms of the sales agreement under which the
  promissor assures the quality, description, or
  performance of the goods.

4
Implied Warranty of Merchantability

• A presumed promise by a merchant seller of goods
  that the goods are
• reasonably fit for the general purpose for which
  they are sold
• properly packaged and labeled
• of proper quality.

5
Implied Warranty of Fitness for a particular
Purpose

• A presumed promise by a seller of goods that the
  goods are fit for the particular purpose for
  which the buyer will use the goods.
• The seller must know the buyers purpose and know
  that the buyer is relying on the sellers skill
  and judgement to select suitable goods.

6
Liability Based on Negligence or Misrepresentation

• Due care must be used by manufacturer in
  designing the product, selecting materials, using
  the appropriate production process, assembling
  and testing the product, and placing adequate
  warnings on the label informing the user of
  dangers of which an ordinary person might not be
  aware.

7
Liability Based on Negligence or
MisrepresentationContinued

• Privity of contract is not required. A
  manufacturer is liable for failure to exercise
  due care to any person who sustains an injury
  proximately caused by a negligently made
  (defective) product.

8
Liability Based on Negligence or
MisrepresentationContinued

• Fraudulent misrepresentation of products may
  result in a tort of fraud. A manufacturer may
  also be liable for nonfraudulent (innocent)
  misrepresentation of a product to a user.

9
Requirements of Strict Product Liability

• 1. The defendant must sell the product in a
  defective condition.
• 2. The defendant must normally be engaged in the
  business of selling that product.
• 3. The product must be unreasonably dangerous to
  the user or consumer because of its defective
  condition ( in most states).

10
Requirements of Strict Product LiabilityContinued

• 4. The plaintiff must incur physical harm to self
  or property by use or consumption of the product.
  (Courts will also extend strict liability to
  include injured bystanders.)
• 5. The defective condition must be the proximate
  cause of the injury or damage.

11
Requirements of Strict Product LiabilityContinued

• 6. The goods must not have been substantially
  changed from the time the product was sold to the
  time the injury was sustained.

12
Liability Sharing

• In cases in which plaintiff cannot prove which of
  many distributors of a harmful product supplied
  the particular product that causes the
  plaintiffs' injuries, some courts have applied
  industry-wide liability. All firms that
  manufactured and distributed the harmful product
  during the period in question are then held
  liable for the plaintiff's injuries in proportion
  to their respective shares of the market as
  directed by the court.

13
Possible Defenses to Product Liability

• Assumption of the risk on the part of the user or
  consumer.
• Misuse of the product by the user or consumer in
  a way that is unforeseeable by the manufacturer.

14
Possible Defenses to Product LiabilityContinued

• Contributory negligence on the part of the
  user-consumer. In some states, liability may be
  disbursed between plaintiff and defendant under
  the doctrine of comparative negligence.